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Martial Settlement Agreements – How to work things out before filing for divorce March 27, 2008

Posted by margolinlegal in Alternative Dispute Resolution (ADR), Dissolution, Domestic Partners, Legal Separation, Property Division, settlement.
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I often have clients ask me how they can lock in an agreement with their spouse regarding how to divide up their assets in an impending divorce. Usually these clients have not yet filed for divorce. The answer is to execute a marital settlement agreement. Marital settlement agreements can also be used in the collaborative divorce process to formalize an agreement between spouses prior to finalizing their divorce.

A marital settlement agreement is a contractual agreement entered into by a husband and wife prior to their divorce. The settlement reached can be much more detailed and individualized than a judge’s ruling and can include provisions that a judge would not legally be allowed to include. The parties can work with their attorneys to make sure that their individual needs are accounted for while providing a fair division of the parties’ assets and debts.

A marital settlement agreement can also be used by parties who want to have a trial separation, but also be certain of how a divorce will proceed if they are unable to save their marriage. Clients will often want to file for a legal separation in order to preserve their rights while still being able to stay on the other spouse’s health insurance. Rather than going thorough that process, they can sign a marital settlement agreement and wait to file for divorce until the health insurance issue can be rectified.

A court is not required to approve the parties’ marital settlement agreement. A court will almost always approve the agreement provided that the agreement is fair and that both parties knew what they were agreeing to. In order for the parties to be as secure as possible that the agreement will be approved by the court they must disclose truthfully all of their financial information to the other spouse, must actually abide by the terms of the agreement during the time between signing the agreement and filing for divorce, and they must actually get divorced in a reasonable period of time. If, for instance, the parties wait many years to divorce, a court would be less likely to approve the agreement.

With the passage of the new domestic partnership legislation in Oregon, domestic partners may be able to use marital settlement agreements to formalize issues prior to dissolving their domestic partnership.

In conclusion, martial settlement agreements provide a great way for clients to divorce in an amicable and mutually beneficial manner.

New Case Law: Attorney Fees – Arbitration vs. Appeal March 22, 2008

Posted by margolinlegal in Arbitration, Attorney Fees, Dissolution, Legal Developments, Property Division.
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As a Portland Oregon divorce lawyer, it is important to keep up to date on Oregon Court of Appeals and Oregon Supreme Court opinions. As a service of The Oregon Divorce Blog, we will be providing updates as new opinions come out.

On March 19, 2008, the Oregon Court of Appeals, in Ornelas and Ornelas, explained the difference between awarding attorney fees in arbitration appeals and appeals to the court of appeals.

In an Oregon divorce case where the parties have no children and no spousal support award is requested by either party the case is sent to mandatory arbitration. If either party disagrees with the result in arbitration, that party can appeal the arbitrator’s ruling for a trial de novo at the circuit court level. That means that a judge will look at the case without referring to the arbitrator’s ruling.

ORS 36.425(4)(c) provides:

“If a party requests a trial de novo under the provisions of this section, the action is subject to arbitration under ORS 36.405(1)(b), and the position of the party is not improved after judgment on the trial de novo, the party shall not be entitled to an award of attorney fees or costs and disbursements and shall be taxed the costs and disbursements incurred by the other parties after the filing of the decision and award of the arbitrator.”

This means that the trial court must make an award of attorney fees to a party who asks for a trial after arbitration and does not receive a better result.

In Ornelas, the husband was upset because his wife not only asked for trial de novo after she was unhappy with the arbitrator’s ruling, but also appealed the trial court’s ruling. She received a worse result on appeal than she did at arbitration or at the trial court level. Therefore, husband argued that wife must pay his attorney fees.

The court of appeals ruled that the attorney fee award language in ORS 36.425(4)(c) only applies to trial de novo and not to appeals. This is because the court of appeals has discretion to award or not award attorney fees on appeal pursuant to ORS 107.105. Meaning that even if you do worse on appeal that at arbitration, you can still receive an attorney fee award.

The court ended up not awarding attorney fees to either party since the final distribution of martial assets put husband and wife on roughly equal financial footing.

The entire opinion can be reviewed at http://www.publications.ojd.state.or.us/A128901A.htm.

Divorce Myths: The differences bewteen an annulment, legal separation, and a divorce March 21, 2008

Posted by csstephens in Annulment, Dissolution, Legal Separation, Myths, Property Division, Spousal Support.
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istock_000004698338xsmall.jpg As a divorce lawyer practicing in Portland, Oregon, one common myth I hear is that annulments offer substantially different relief than divorces. Another version of the myth is that legal separations offer substantially different relief than divorces or annulments. The purpose of this post is to explain the basis for legal separations, annulments, and divorces, and to explain the relief each offers. The myth is that they are all very different. The reality is that except for a few key points, they are almost the same.

Annulments, legal separations, and divorces are more similar than different. The differences can be categorized by (1) the legal standard to obtain them, and (2) the relief available.

The legal standard to get a divorce or an unlimited separation is defined in ORS 107.025 which provides that “A judgment for the dissolution of a marriage or a permanent or unlimited separation may be rendered when irreconcilable differences between the parties have caused the irremediable breakdown of the marriage.” In English, the marriage is broken and can’t be fixed.

The court can give you a “legal separation” if irreconcilable differences between the parties have caused a temporary or unlimited breakdown of the marriage; and the parties file an agreement suspending for a year or more their obligation to live together as husband and wife, and the court finds such agreement to be just and equitable; or irreconcilable differences exist between the parties and the continuation of their status as married persons preserves or protects legal, financial, social or religious interest. In English, if you have a marital problem, and want to suspend your marriage for a year, you can. If you have a marital problem, but need to remain married because you are religious, need your spouse’s health insurance, need to protect a legal interest, or don’t want to hold yourself out as divorced, you can get a legal separation.

The court can give you an “annulment,” or a divorce if you don’t want an annulment, when “either party to the marriage was incapable of making such contract or consenting thereto for want of legal age or sufficient understanding; (2) When the consent of either party was obtained by force or fraud.” ORS 107.015. Per ORS106.020, the court can also grant an annulment when “either party thereto had a wife or husband living at the time of such marriage.” or “when the parties thereto are first cousins or any nearer of kin to each other, whether of the whole or half blood, whether by blood or adoption, computing by the rules of the civil law, except that when the parties are first cousins by adoption only, the marriage is not prohibited or void.”

The relief offered by each is more similar than different. ORS 107.105 states what the court can do in all three types of cases. In annulments, disillusions, and separations, the court can make provisions for:

Temporary orders per ORS 107.095 for:

  1. attorney fees
  2. custody
  3. child and spousal support
  4. parenting time
  5. changing the kids routine
  6. awarding a party exclusive possession of a residence

Final orders per ORS 107.105 for:

  1. Custody of all children of the marriage.
  2. Parenting time for all children of the marriage.
  3. Child support.
  4. Transitional, compensatory, and maintenance spousal support.
  5. Division of real property.
  6. Division of personal property.
  7. Creation of trusts for children.
  8. Creation of trusts and appointment of trustees for the parties to manage property.
  9. Restore a former name.
  10. Continue a money award from a limited judgment.
  11. Award attorney fees and costs.

What are the differences between an annulment, legal separation, or divorce? If your marriage is annulled, it is as if it never happened. Per ORS 107.005, in an annulment case, the court can declare a marriage valid, void from the beginning, or void from the time of judgment. If you get a legal separation, you are still married, until you convert your separation into a divorce. An important side-note is that you can file for a legal separation without meeting the 6 month residency requirement. If you need immediate relief, it is a great option. In a divorce, the marriage is terminated when the judgment is entered.

What does this all mean? Annulments, legal separations, and divorces are much more similar than different. You can get virtually identical relief in all three, but there are subtle differences. Talk to an experienced family law attorney to see if the differences between the three may help you in your case.

Who gets to claim the child tax exemption? March 10, 2008

Posted by margolinlegal in Child Custody, Child Support, Dissolution, Myths, settlement.
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istock_000004891591xsmall.jpg Clients often come to me asking whether they or their ex-spouse/unmarried parent of their child can claim their joint child as a dependents for tax purposes and receive the dependent tax exemption. They often think that this is a decision that is up to them and attorneys often use it as a bargaining chip.

In a divorce or custody case I am representing clients in state court. The United States Congress, through the tax code, has determined how the child/dependent tax exemption should be awarded. The supremacy clause of the United States Constitution prevents state courts from deciding issues of federal law. This means that a state court cannot properly award the exemption to a parent who otherwise would not qualify for the exemption under federal law.

The qualifying parent under IRS rules is the “custodial parent,” which is defined as “the parent having custody for the greater portion of the calendar year.” The award of “legal custody” has no effect on this definition, rather the custodial parent is “the parent with whom the child resides for a greater number of nights during the calendar year.” In cases where the child resides an equal number of overnights with each parent, the parent with the higher adjusted gross income for the calendar year is awarded the exemption.

Parties can agree to share the exemption or to have the parent that does not qualify receive the exemption. This is usually accomplished by a provision in the parties’ judgment. In order to provide the non-qualifying parent with the exemption, the qualifying parent must sign a written declaration and the declaration must be attached to the non-custodial/non-qualifying parent’s income tax return. This can be completed using IRS tax form 8332, which can be found here http://www.irs.gov/pub/irs-pdf/f8332.pdf.

A decision to allocate the dependent exemption to the non-qualifying parent should not be taken lightly. In addition to the exemption, the non-qualifying parent will also receive the child tax credit. Therefore, an agreement to deviate from IRS rules can have significant tax impacts for the qualifying parent and creat a tax windfall for the non-qualifying parent. If the agreement will be included as a provision in a judgment, the decision to do so should be carefully discussed with your attorney.

The IRS faq located at http://www.irs.gov/faqs/faq-kw46.html provides detailed information on this question.

Divorce Myths: Everything must go before we are divorced! January 20, 2008

Posted by csstephens in Myths, Property Division, settlement.
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for saleA surprisingly common “divorce myth” we hear in our practice is that division of property must happen before the couple is divorced. There is no such rule! The court’s power to divide property after a divorce is defined in ORS 107.105(1)(f). Whenever a court finalizes a divorce, separation, or annulment action, the court can provide for the division of real property and personal property as is “just and proper in all the circumstances.” For example, the divorce judgment may explain how the parties are to divide the personal property after the divorce, or provide rules about how the parties will sell real property after the divorce. Once you have an agreement (or court ruling) on division of your assets, you can divorce first and divide and sell later.